Enhancement of erythroid differentiation accompanied by a reduction in malignant potential occurs when cells of cloned lines of murine virus-induced erythroleukemia are grown in medium containing 2% DMSO or 1% DMF. BUdR inhibits the enhancing effect of DMSO or DMF and sharply curtails the synthesis of globin mRNA, suggesting that there is a block in the maturation of the leukemic cells at the level of transcription. Further studies on the mechanisms of action of DMSO and those involved in regulating hemoglobin synthesis, differentiation and malignancy continue.